Asked by Tori
You purchase a bond for $875. It pays $60 a year (semiannual coupon is 3%),
&the bond matures after 10 years. What is the yield to maturity?
&the bond matures after 10 years. What is the yield to maturity?
Answers
Answered by
Anonymous
Calculation of yield to maturity:
Yield to maturity = (C + ((F-P)/n))*2 / ((F+P)/2)
F = Face value = $ 1000
C = Semiannual Coupon Payment = Face value * Coupon rate = $1000*3% = $30
P = Price = $875
n = number of semiannual = 10 years *2 = 20 Semiannual
Yield to maturity = (30 + ((1000-875)/20))*2 / ((1000+875)/2)
= (30 + 6.25)*2 / 937.50
= 72.50 / 937.50
= 0.077333
= 7.73 %
Answered by
Tori
thank you very much
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.